Everyone wants to be a billionaire, there’s even a Bruno Mars song about it. To be part of the three-comma club is an aspiration of many, but let’s quantify a billion.
What does a billion mean anyway?
First of all, let’s quantify a billion. What does it mean to have a billion? How can you quantify that and will you be able to spend it all in your lifetime? Would you quit your job and what would you do if you had a billion?
How many billionaires are out there?
Few businesses and industries are soaring right now because of the pandemic. among them is the Zoom video conferencing app. Its founder and CEO Eric Yuan just earned $4B in just three months with a huge spike in the use of his service as everyone is working from home nowadays. (Business Insider)
Turns out being a billionaire is extremely rare, given the following stats:
- 2000+ billionaires around the world
- 540+ billionaires in the US
- 800+ billionaires in China
- Only 1 in 3.5 million people are billionaires.
- If you are a billionaire, you are wealthier than 10 of the poorest countries combined
- All 2,000+ billionaires are richer than 60% of the world’s population (Bloomberg)
To give you context on how rare billionaires are, there is 1 in 700K chances of someone getting struck by lightning. That means you are 50x more likely to get struck by a lightning than becoming a billionaire.
What would you do if you
have a billion dollars in cash?
It is worthy to note that most of the net worth of billionaires are tied to shares of stock. Most billionaires become billionaires by taking their company public. Being a billionaire does not mean one has a billion dollars in cash. But in our hypothetical ‘what-if’ scenario, we set the parameter to having a billion dollars in cash. What would we do if we have 1B in cash?
Quantify a Billion
Having a billion dollars in cash is a lot of money. If you spend 1,000 USD every day (365K a year), it will take you 2,739 years to consume all of it–that’s two millennia, spanning even way before the time Jesus was born! However, if you do want to consume all the 1B in your lifetime, you need to spend 40K a day for 70 years.
“If I had 1B in cash, would use 500M for useless things for myself – mansions, cars, travel and gifts for others. For the other half, I would invest it. Even absolutely no-risk 10 year treasury bills with a 1% annual interest will give me 5M a year so you can essentially just live on interest.”Rachel, WDYTO
Once we quantify a billion, the status of billionaire invites questions:
- How did they acquire it?
- What are they going to do with it?
How to be Wealthy?
Let’s go back to the basics.
Wealth can be created via labor, or capital:
* Multiple income streams
* Passive income (through capital)
Most popular way to earn is by giving labor and time and receiving a salary in turn. Other income streams are by accumulating assets and capital and renting it or reselling it at a higher price.
Read more: What are the income streams of millionaires?
Most of the wealth is created not when you work for money, but when money works for you. Passive income is one of the best sources of income.
Be a thinker. People get paid handsomely for their ideas: intellectual property, data, franchising.
Wealthy people are thinkers with leverage. Wealthy people make important investment decisions—decisions amplified with leverage. Proper allocation of resources require sound judgment to optimally allocate labor, technology, capital and create financial value.
Finally, you could also have a handsome inheritance and access to a trust fund in order to becoming healthy. But if you’re one of the majority, we cannot bank on that possibility.
Sacrifices for Great Wealth
There is, however, a dark side to being extremely wealthy.
Many those who have gotten rich quick without even earning that lose it just as quickly too–such as lottery winners. To paraphrase Spiderman, ‘with great money comes great responsibility’.
Your life will never be the same again. There’s a big difference between getting a billion dollars and losing privacy versus getting a billion dollars in secret. Maybe it’s better to get 20 million dollars in secret versus getting a billion dollars and it gets published. (Also, just like charity with anonymity when it comes to altruism)
“I’m going to buy an investor’s visa in Monaco or NZ and buy a house there until I become a citizen there. I would be wise to get out of the country to stay private, and keep myself from contact with would-be criminals, politicians, moochers, and users.” – Ken
Wealth makes you an instant target to predators. Money will turn your life upside down and your life will never be the same again.
To Advance your Learning:
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